Food prices are rising, corporates are failing to innovate and diets are shifting – it’s the perfect recipe for a food tech start-up.

Marta Zaraska is the author of Meathooked: The history and science of our 2.5-million-year obsession with meat​. In a piece for New Scientist​ recently, she noted that feeding 10 billion people by 2050 will require some creative solutions and unpalatable compromises: “Perhaps we can learn to love algae, corn husks and crickets, but what about lab-grown meat, synthetic milk and genetic modification?”​

The year 2050 is a long way off but investors in food tech believe there has never been a better time – “in history”​ – to start a food tech business that will deliver some of these innovations. “What’s happened in the last 25 years in [this space]?”​ asks Niccolo Manzoni, a food tech investor. “Not much. Not much that’s disruptive anyway. [But] now it’s attractive to investors… it’s super-exciting.”​

It’s a harsh assessment but when money talks, it’s pertinent to listen. Manzoni cites a convergence of factors that have helped to open wallets in financial hubs across the world – especially in the US.

At the macro level there’s the inability of the large corporates to be radical, consumer demand for “better food at the right price” ​as well as a shift in diets that has seen protein become the key ingredient.

That the capital and time intensity of some of these innovations has “dropped dramatically” ​has certainly helped too, he adds.

Indeed, venture capital funds will look for scalable innovations that they can get to market quickly with a decent capital to growth ratio – and traditionally this has left food in the shadow of digital technology. Not anymore.

Impossible Foods is the pin up, but it’s often forgotten that the company’s high profile “burger that bleeds”​ took five years and €75m ($80m) to develop – and that’s before a burger was sold.

The Impossible Burger was first plated up last summer in New York’s Momofuku Nishi restaurant, but it’s quickly moving more mainstream: last month it debuted at the chain restaurant Bareburger.

Cash cow​

Money has been flooding into Silicon Valley, San Francisco, and it’s beginning to pay off, it seems. Impossible isn’t the only show in town.

Last month, Memphis Meats revealed its lab-grown chicken strips. “​This represents one of the biggest technological leaps for humanity,”​ the San Francisco-based start-up boasts. “Our technique for meat production could require up to 90% less land, water and greenhouse gas emissions than conventional meat production.”​

Ethical, environmentally friendly innovation certainly seems to be ticking the right boxes for investors at the moment. So too is health. “We found a lot of high net worth individual looking at technology,”​ explains Neil Foster, commercial manager at Ireland-based food tech start-up Nuritas. “They see food, health and saving the environment as cool things to use technology for.”​

Nuritas, which uses big data to discover peptides that can be used in supplements or drugs, has a long line of high profile investors, including U2 band members Bono and The Edge.

Foster suggests Europe might have an inferiority complex following all the hype the US food tech firms have created. “Maybe we have to think a bit bigger in Europe,”​ he says.

Speaking to some of the other experts, entrepreneurs and academics gathered at March’s Future Proteins ​summit in London, there was a slight whiff of negativity: maybe Europe is arriving too late to the party?

Manzoni certainly thinks otherwise. True, there’s not as much capital available on this side of the Atlantic, but “Europe is a fertile ground for innovation”,​ he says.

Possibility and profitability​

Europe has only a couple of funds dedicated to food tech – Anterra Capital in the Netherlands and Capagro in France (there are 400 specialising in digital tech). It’s a specialist area, with challenges in terms of lead time, regulation and scalability – not to mention consumer acceptance.

The US firms have been able to raise a lot of money, very quickly given that the market is bullish about start-ups and prepared to take greater risks.

Mosa Meat – the Dutch firm backing the scientists who created the world’s first laboratory grown burger in 2013 – is preparing for the next phase in its project.

Peter Verstrate, the CEO, says funding should be secured within the next couple months but commoditising the concept is a long way off.

The plan is to start small and premium in around five years’ time, he explains, “like Impossible Foods are doing now”.​

Manzoni is currently preparing the groundwork to launch a specialist food tech fund later this year which will, he hopes, help to “move the needle”​ in terms of investment in Europe, as well as elsewhere.

Is he looking for the next Impossible Foods? It would certainly give other entrepreneurs the confidence, he says, and the timing is perfect: “I’m excited about the shift in diets, functional ingredients, personalised nutrition and new sources of protein.”​

And so he should be. Extensive research carried out by the UK’s Food Standards Agency, for example, shows consumers are hungry for more innovation​​ in areas such as nutraceuticals and functional foods. The former category alone could be worth €35bn come 2020, according to some forecasts.

Alternative proteins – which could take a third of the protein market pie by 2054, according to Lux Research – is another area of furious innovation and investment.

The noises made by some of the world’s biggest meat processors have not gone unnoticed in fund management circles, either. Manzoni explains: “I invested in Beyond Meat and a year and a half later Tyson Foods did the same. It’s really interesting … how they are positioning themselves not as a meat company but as a protein company.”​

Alternatives are hot to trot​

Just recently Tyson’s new CEO noted that protein consumption is growing around the world – and continues to do so. “It’s not just hot in the US; it’s hot everywhere,”​ Tom Hayes said in an interview with Fox Business.

“People want protein. Plant-based protein is growing most, at this point, a little faster than animal-based, so I think the migration may continue in that direction.”​

Tyson “touches”​ two of every five plates in the US, reportedly, so there were always going to be raised eyebrows when it became a minority investor in Beyond Meat last October.

Here’s how the start-up’s CEO and founder Ethan Brown justified the move: “I don't expect to change Tyson. Nor does Tyson expect to change me. Instead, we both intend to serve the changing consumer.”​

It’s an important point: food entrepreneurs need to embrace the food industry and “work with it, not try to destroy it”, ​Manzoni suggests.

Nuritas, for example, is collaborating with BASF in a project focused on novel functional peptides​​. ​The sector’s big players have huge amounts of money, as well as skills, systems and research capability that are “unmatched”,​ Manzoni adds. “It shouldn’t be them and us. Collaboration will create lasting innovation.”​

Sometimes ‘big food’ doesn’t help matters, of course; Unilever’s spat with Hampton Creek over the egg content of mayonnaise is a case in point.

Disruption rather than destruction is what makes food tech an exciting sector though. “The time is right to move on with some of these [new protein] programmes,”​ says Claire Hughes, head of nutrition and science at Marks and Spencer.

Manzoni is more dramatic: “There’s never been a better time in history for a food tech entrepreneur to start a business.”​